Sunday, July 31, 2016

GDP Growth Disappoints

In terms of average annual growth, the pace of this expansion has been
by far the weakest of any since 1949. (And for which we have quarterly
data.) The economy has grown at a 2.1% annual rate since the U.S.
recovery began in mid-2009, according to gross-domestic-product data the Commerce Department released Friday.
The prior expansion, from 2001 through 2007, was the only other
business cycle of the past 11 when the economy didn’t grow at least 3% a
year, on average.
Total growth this expansion ranks just 8th of the past 11 cycles. The
U.S. economy, at the end of June, was 15.5% larger than it was when the
recession ended in 2009.
The current expansion remains smaller than the one during Richard Nixon‘s
administration. And that 16% expansion lasted just three years. The
economy grew 18% from 2001 through 2007. It grew 52% from 1961 through
1969.
Despite the current expansion’s lack of intensity—or perhaps because of it—it is now one of the longest.

The chart which accompanied the article is very telling. Since the 1980-1981 recovery, every recovery has come with a lower GDP growth rate than the one before it. I think it is notable that each recession during this time period has resulted in the permanent loss of manufacturing jobs. To me, it seems like a simple explanation that GDP growth has decreased as the middle class has decreased. As long as we keep losing good-paying jobs and replacing them with lower-paying jobs, we are going to see anemic GDP growth. The real question is how we can end this crapification of the economy.